Methods of Income Generation

Social enterprises use a variety of methods to generate commercial income to sustain operations. At any given time, a social enterprise may use one or a combination of methods, based on the type of enterprise and business strategy.

Method Description Examples
Fee-for-service Charging constituents or clients for social services in order to recover costs of service provision. Museums charge entry fees; microfinance institutions sell financial services; rural clinics collect sliding scale fees for doctor visits.
Products Earned income through manufacturing and product sales, or through mark-up and resale of products. Horticulture cooperative sells flowers wholesale to suppliers; a fair trade company imports cocoa beans and manufactures them into chocolate products to sell in western markets; a handicraft marketing company sells artisan products through a catalogue and takes a commission on sales; a café employing disabled people sells coffee and snacks to the public.
Services Commercialization of a skill or expertise to a market willing and able to pay. Hunger relief organization sells catering services to schools and institutions; children's education organization provides daycare service for a fee; mental health organization sell psychotherapy and counseling services; a national microfinance institution sells management consulting services to other nonprofit organizations interested in starting credit programs.
Membership Dues Fees collected from members of a group, association, or organization in exchange for services such as a newsletter, discounts, conferences, insurance, etc. Dairy subsector trade association provides market information and linkages to its paying members; organization of social enterprise practitioners receives newsletter, listserv, industry reports, job listings, and an annual conference in exchange for an annual fee.
Tangible Assets Generating income by renting or leasing a tangible asset such as office space, building, land, vehicles, or equipment. Human services organization leases its idle office space to another nonprofit organization; a community development organization rents its trucks to a moving company on the weekends; an environmental conservation organization leases its land to an eco-touring organization.
Intangible Assets Generating income by leveraging an intangible asset such as proprietary content, methodology, brand, reputation, relationships, goodwill, etc. International Children's organization licenses its logo and brand name to a clothing line; a university obtains research contracts for scientific study from technology companies; a membership organization sells its mailing list; a youth news agency sells its print content to an online educational service targeting young people.
Investment Dividends Passive income earned from investments. Interest income and dividends from bonds, stocks, savings deposits, and other investments.
Unrelated Business Activities Revenues from a business unrelated to the organization's mission and created for the purpose of funding specific social activities or the organization at-large. Museum shop or retail store of an environmental organization; Girl Scout cookies; a catalogue trinket business supporting a public radio station; nonprofit real estate holdings.